Are investors ditching agritech for AI?

Written by Stacy Chew

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As global temperature rises, agriculture bears the brunt of the heat – affecting our crops that are one of our major food supplies.

This pushed sustainable experts and innovators to conjure up a solution which is now known as agritech – investors were backing vertical farms, alternative proteins and climate-resilient food systems with the belief that technology could transform how we grow and secure our food.

Today, the mood feels very different.

As generative AI continues to dominate headlines, venture capital is increasingly flowing towards AI startups that promise rapid growth, faster commercialisation and shorter paths to profitability.

Meanwhile, agritech startups are finding themselves in a much tougher environment.

The question is no longer whether AI is attracting investment – it’s whether agritech is being left behind.

A shift in funding priorities

Image courtesy of: Crunchbase

According to industry reports, support for agrifood startups continued to decline, reaching some of its lowest levels by 2025. Deal volumes and investment values both fell as investors became more cautious and prioritised sectors with quicker returns.

The challenge for agritech has always been its timeline.

Source: @artisan.green on Instagram

Unlike software startups, agricultural innovations often require years of testing, regulatory approvals, seasonal field trials and operational validation before meaningful revenue can be generated.

Many founders spend years proving that their technology works under real-world conditions before they can even begin scaling. For investors operating on traditional venture timelines, that can be a difficult proposition.

AI startups, on the other hand, can launch products quickly, acquire users rapidly and demonstrate growth within months rather than years. In a market where capital is becoming more selective, it’s easy to see why investors are gravitating towards faster-moving opportunities.

Yet, investors aren’t writing off agritech entirely.

Investors still see opportunities in Southeast Asia agritech

Mushroom Buddies is a social enterprise integrating agritech to grow mushrooms, while empowering people with special needs with job opportunities.

Image courtesy of: Mushroom Buddies

Recent reports estimate that agritech innovation could unlock up to US$90 billion in economic value across Southeast Asia. The region faces growing pressures around food security, climate resilience and agricultural productivity, making innovation more important than ever.

The demand hasn’t disappeared.

What has changed is the expectation that founders must prove commercial viability much earlier.

Investors are no longer funding ambitious ideas alone. They’re looking for evidence of customer demand, clear pathways to adoption and business models that can survive beyond pilot programmes.

What about Singapore?

The funding slowdown is also being felt closer to home as Singapore recently revised its original “30 by 30” food production ambitions, replacing them with new fibre and protein production targets for 2035.

The move comes after several years of operational challenges, farm closures and a difficult financing environment for local agri-food businesses.

Many local farms and agritech companies have struggled with rising costs, limited land availability and difficulties scaling commercially.

While the Government continues exploring ways to strengthen the sector through shared infrastructure and new farming facilities, startups also need practical support for agrifood startups in Singapore.

Beyond financial assistance, founders increasingly require agrifood startup support in Singapore that helps them validate technologies, secure customers and build commercially viable businesses.

Realities of maintaining an agritech startup

For agritech founders, fundraising is no longer the only challenge. The startups that survive this cycle will likely be those that can demonstrate traction beyond technology itself.

That means securing pilot opportunities, validating market demand, building customer relationships and converting early adopters into paying clients.

In other words, execution matters more than ever. A great product is important. But in today’s market, investors increasingly want proof that customers are willing to pay for it.

How founders can adapt

Entropy Lab turned outdated paint regulations into an opportunity, updating the rules and expanding to shipping giants.

Image courtesy of: Entropy Lab

The funding environment may have changed, but opportunities still exist for startups that can prove their value. To stay competitive, founders should focus on testing their solutions in real-world environments and gathering evidence that their technology delivers measurable results.

They also need to validate market demand early, ensuring there is a clear customer need before committing significant resources to scaling. Building strong partnerships and converting pilot projects into paying customers can help demonstrate commercial viability and create sustainable revenue streams.

At the same time, fundraising efforts should be supported by tangible traction and data rather than future projections alone.

More than ever, investors are looking for startups that can show a clear path from innovation to commercial success.

Image courtesy of: Vidacity

At Vidacity, we work with startups navigating exactly these challenges through pilot and test-bedding opportunities, market validation, market access and client conversion support, as well as fundraising advisory.

If you’re building in agritech and looking to accelerate your path to market, learn more about VidaCircle at vidacity.com.sg/vidacircle.

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